Tesla has become the largest auto-maker in America as measured by market capitalization even though it produces a small fraction of the cars that General Motors produces. Tesla produced about 84,000 cars last year. General Motors produced over 10 million. Yup, I know, Tesla is different than the other U.S. auto makers. Tesla is a growth stock. You hear it from the analysts whose banks regularly underwrite securities for Tesla that Tesla has a cult following. It is more like Apple than General Motors. That’s possible, but do you want to invest your money in a company that is burning cash … [Read more...]
Archives for August 2017
Pumping Gas to the Tune of $8 Million
Hard to even comprehend, but this great story, courtesy the WSJ's Anna Prior, recounts how Ronald Read accumulated an estate valued at almost $8 million. Mr. Read, who passed away at the age of 92, made a modest living pumping gas for many years at a Gulf gas station in Brattleboro, Vermont. A Five-Inch Stack of Stock Certificates How did Ronald Read manage to become a multi-millionaire? Mr. Read invested in dividend-paying blue-chip stocks. As Ms. Prior writes, Mr. Read took delivery of the actual stock certificates and "left behind a five-inch-thick stack of stock certificates in a … [Read more...]
Cheeseburgers in Newport, RI and the Fiduciary Rule
A couple of years ago, after reading one of his investment articles, I reached out to Norb Vonnegut. We met in Newport and talked investments at my all-time favorite burger joint, Mission. Yesterday Norb hit the nail on the head about why Spotify is eschewing Wall Street for it’s IPO. It will basically be a DIY deal. The game is up for the self-dealing, old school wire houses. The future will continue to favor investment firms that abide by the fiduciary rule, or in other words, serve their clients' best interests. It’s a rule that Richard C. Young & Co., Ltd. has always … [Read more...]
Wal-Mart Expands Online Grocery Delivery
Amid increasing competition from companies like Aldi, and the potential for more from Whole Foods/Amazon, Wal-Mart is expanding its online grocery delivery service to Dallas and Orlando. Wal-Mart is finding success in online grocery sales, as those who shop online tend to spend more. This mirrors recent success Wal-Mart has been finding on its e-commerce properties. At Bloomberg, Matthew Boyle explains Wal-Mart's push for expanded grocery delivery: The move is the latest step in Wal-Mart’s broader e-commerce push, which includes curbside grocery pickup in more than 900 locations and … [Read more...]
Is 2017 the End for Independent Grocers?
A number of headwinds are slamming into independent grocers, including competition from Amazon, a proliferation of "Dollar Store"-type discount retailers, and increased cost cutting by major grocery chains. Independent stores and small regional chains are getting eaten up by acquisitions from larger names, or just going out of business. Heather Haddon and Lillian Rizzo write: Bankers who handle food-retail deals say the squeeze is creating more acquisition opportunities for big grocers, particularly as smaller family run companies face an older generation of leaders stepping back. “The … [Read more...]
The Trouble with this Bond Fund
You could almost see the trouble coming at Double Line Capital’s largest bond fund Total Return. Actually I did as I wrote to you back in 2014. Turns out chasing performance has a shelf life. Investors are taking on more risk—and are doing it in a major way. Bond funds, which should be your anchor-to-windward money, are loading up on junk. The below investment grade waste piling up in the 10 largest bonds funds is shocking. We’re not talking small potatoes here. These are the big dogs. “Who wants an index fund that yields 2%?” said Jeffrey Gundlach, manager of the Total Return … [Read more...]
Can China’s Stop-and-Go Market Reforms Work Forever?
It's two steps forward and one step back in China. As the country allows more market liberalization, companies find ways to exploit the system. Inevitably they run afoul of Chinese state interests, and the government adds new restrictions to remedy the situation. Thus is the ebbing and flowing of market reform in China. But how long can that dynamic persist? Today the New York Times reports that China is cracking down on overseas real estate purchases by its corporations. The businesses are using more debt than the state would like, and to limit "systemic risk" it is cracking … [Read more...]
How an Introvert and DARPA Revolutionized Autonomous Vehicles
David Hall, CEO of Velodyne, created what is probably the most important piece of technology in the self-driving vehicle business, LiDAR. Short for "light distance and ranging," LiDAR is found on all the automated vehicles you have seen. The sensor tells the vehicles' brains about their surroundings, giving them the data they need to react. In a Forbes profile, written by Alan Ohnsman, the story of how a DARPA contest drove Hall to build LiDAR is explained. At one end there's a barn-size industrial shed where Hall and a team of engineers are perfecting one of his latest obsessions: a … [Read more...]
Is Wal-Mart Ready to Compete with Amazon Online?
A surge in e-commerce sales boosted Wal-Mart last quarter. After aquiring Jet.com, Bonobos.com, and beefing up Walmart.com, Wal-Mart is beginning to get some traction in online retail. Sarah Nassauer and Austen Hufford report: The strong sales figures come at a time of stiff competition among retailers facing Amazon.com Inc. While U.S. consumer spending appears strong, according to July sales data at retailers and restaurants released Tuesday, some apparel and department-store chains are struggling with customers’ changing shopping habits. U.S. grocers, of which Wal-Mart is the largest by … [Read more...]
What Can America Win in NAFTA Negotiations?
NAFTA renegotiations have begun between the three treaty members. Businesses with international operations are watching closely to see whether or not they will be affected, and if so positively or negatively. President Trump has been a harsh critic of NAFTA and its effects on the American economy, while leaders in Canada and Mexico are happier with the current treaty. The Wall Street Journal reports that leaders want to work through the renegotiation as quickly as possible in order to avoid it becoming an issue in elections next year. “Our first goal is to keep the deal in place,” said … [Read more...]
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